Personal loans are an important financial tool for people who need money now, but want to pay the money back over time. Personal loans are often used to pay for bills, send kids to private school or college, to upgrade a home or buy furniture. If you need a personal loan, there are steps that you can take to ensure that you get a low rate loan.
Check your credit score
The biggest factor that lenders will consider when determining your personal loan rate is your credit score. You need to check this before you apply for any loans to make sure that it is at a decent level. If not, also check your credit report to see if you can spot what is holding your score down. You may want to hold off on applying for the loan until you have a chance to correct any negative factors, to avoid getting locked into a high rate. The higher your credit score is at the time your make the application for a persona loan, the better are your chances for a low APR loan.
Some lenders charge higher rates for personal loans than other lenders do. If you are a member of a credit union, this is the best place to start your search. Credit unions often have lower rates and fees for their services than other banks because they are member-owned. You still must qualify under certain criteria, but those who do qualify can find lower rates. If you can’t apply at a credit union, your first step should be searching the Internet for loan quotes to compare current rates from different lenders. Once you have targeted a few banks that you would like to try, you can begin making your applications.
Wait for lower market rates
When market interest rates are lower, loan rates will be lower. The biggest problem with this is that rates may not go down for years and you may need money now. However, if you see that rates are steadily declining and you have time to spare, then you may want to wait for them to “bottom out” before you apply for your loan. This will give you a lower rate than you otherwise would have received from the same lender with the same credit score.